It’s The Tax Cuts, Stupid! Part Three
Tax Cuts = Jobs + Income
President Bush on the beneficial effects of cutting taxes:
…[I]f you look at the tax code after we cut taxes, for everybody who paid taxes, by the way, the tax code is more progressive. The richer people in America pay more of the tax load than they did prior to the tax cuts. That’s a fact.
Secondly, most small businesses pay tax at the individual income tax level. If you’re subchapter S, or a limited partnership, you pay tax as if you’re an individual. And so when you cut, when we cut all rates, you’re really helping the small business sector grow and prosper, which is two benefits. One, most new jobs are created by small businesses, and so when the small business owner has got lower taxes, which means more capital to invest, that means that he is, or she, are more likely to be able to expand the job base of their company.
And secondly, you know, when you cut taxes and make it more beneficial for someone to own a small business, you really expand ownership in our society, and one of the wonderful things about America is the fact that we’ve got people owning something.
We’ve got more people owning a home than ever before. I want people owning and managing their own health care accounts through health saving accounts.
And the idea of more small business owners is such an important part of a hopeful future for the country.
So the tax relief is not only, you know, it’s benefited small business owners and it’s benefited the economy as a whole, and at the same time has made our tax code more progressive.
It’s time for conservatives to remind ourselves that our message is not only right – it’s resonant. No more defense; now is the time for offense (I should know, I offend daily)…
Oh dear God, that first paragraph is sheer idiocy. Let’s do some math here. The top tax rate was decreased by more than any of the other tax rates (making the tax rates less progressive). But the resulting tax revenues show that the actual portion of the load borne by those in the top bracket has increased. What’s the explanation for that? People in the top tax bracket are making a lot more money than those in the other brackets, proportionately. There’s nothing progressive about tax cuts (combined with other federal policies) that allow rich people to make a lot more money than everyone else, again proportionately.
None of this is to say that rich people shouldn’t be allowed to make more money, only that the President is lying through his teeth.
You could poke holes through the rest of his speech as well:
1) While it is true that subchapter s corporations tax income at personal income rates, more typically they are used so that any losses generated by the corporation can be claimed on an individual’s 1040 form. Also, depending on the circumstances of the individual and the corporation, the individual rate can be higher than the corporate tax rate.
2) Any benefit a small business owner would have from decreased marginal tax rates can be offset by the government’s deficit spending (because to repay the debt the government has to compete with private industry for capital, putting upward pressure on interest rates).
3) Whether “it’s benefited the economy as a whole” is an open question. The debt has to be repaid and we are beholden to foreign central banks. The falling dollar makes treasury paper less attractive to foreigners, putting additional pressure on interest rates. I could walk into the local Porsche dealership and drive out with a new 911, and I would have a blast until the bills came in.
4) Federal deficit spending has historically been used to stimulate weak economies. As the economy is fairly decent, we are borrowing heavily now, and we will be paying back the debt in weaker economies, as even George Bush’s voodoo economics has not repealed the business cycle. The perfect storm would be a falling dollar, higher interest rates, and a stagnating economy. While economics can justifiably be called the dismal science, it’s hard to see how we can avoid this storm indefinitely.
Blah blah blah… The debt and the deficit are DOWN as fractions of total GDP while revenues are UP! B-b-but, how can that be when Chimpy McHooverville is hell bent on extending the current Great Depression? It is all about GROWTH, children. Growth growth and then a bit of growth. Once you’ve grown, you grow some more. And then it is wise to grow but only if you do not forget to grow. THAT is what the tax cuts were, are and shall be about. Tax HIKES will choke off that growth proportionally. And that is what the repeal or permitted expiry of the tax cuts will be; hikes. Jeez, I don’t know why this stuff is so hard for so many slowpokes to understand. Or do I?
Wow, magapotamus, you just refuted Peter without a shred of real economics. He makes arguments that are well within traditional macroeconomic theory (which I personally think is wrong because I sincerely doubt that deficits matter much at all), and you respond with “growth growth Chimpy McHooverville growth slowpokes.” You should be so proud of your ability to marshal arguments to your defense.
The simple fact is this: there is no unequivocal evidence that tax cuts have anything to do with economic growth. The facts of the case are disputed and for everything Bush says, there’s a counterargument. My intial point was merely that the first paragraph of his speech is nothing more than lies and complete and utter stupidity. I refused to take a position on the rest simply because the facts can go either way. That said, Peter has attempted to make a serious argument grounded in economics, and his argument deserves more response than your silly Grover Norquist talking points.
Shwuh? Your “point” is that “that the first paragraph of his speech is nothing more than lies and complete and utter stupidity”. M’kay. Based on what? Bush makes his assertions on the foundation of the current numbers. What is your objection based upon other than lies and complete and utter stupidity? It seems only a misunderstanding of the term “progressivity” in relation to taxes. Sure, you can say that only rates are the true realm of such, but Bush says, and is quite correct, that the “rich” so called are paying a larger portion of a larger pie. THAT is also progressivity although I don’t see any inate value to that socialistic “value” myself it is whined about with great regularity. Well, I could go on with you and peter but you’re just too darn stoopid. Don’t like that kind of thing? Well, quit engaging in it and you might not have to suffer it. God, you weasels really crack me up. Complain about this and that and never… never ever ever never consider that you might be guilty yourself. Make a rational argument and you MIGHT get a rational answer. Might, with some luck but come out of the gate with witless insults and what is the result? Hmmm. A puzzler.
And for our friend peter, as you say, he makes macro arguments that are well within the mainstream but the mainstream, inluding most glaringly the CBO, never… never ever ever never, takes into account the effects of supply-side growth or, as you would have it, “voodoo economics”, a laughably ignorant formulation (and yes, I know its provenance). Again, as you say the numbers and their meaning are perpetually in dispute, except you have them pegged and figured out. Oh wait, no you don’t. You admit you can’t explain the economic phenomena recent and not so, but you know what DIDN’T have any salutory effect. That damn Bush! Oy, that you know as well as your own name. This, among other absurdities, is why you leftwing jackasses don’t have a snowball’s chance. It’s like playing darts with a blind man: exciting, a bit dangerous and unpredictable but in the end, man, you’re still just casting about. What a larf!
Well, as a “left wing jackass” (and proud of it!), I’m not quite sure where to begin. However, the facts may be a good place to start:
1) Growth is not always an unalloyed good thing. The Weimar Republic had a booming economy from 1923 to 1929, but the government efforts to nurture that boom had within it the seeds of future disaster. Deficit spending by the government is intrinsically stimulative (although greater stimulus typically comes from public works projects than from tax cuts). My point is that while the good times roll, the storm clouds ahead will cause much economic misery (extra points for today’s most hackneyed and mixed metaphors).
2) Economic statistics (and especially averages) can be deceiving. If I told you that you have to cross a river that is on average five feet deep, I’m not giving you much help. The reason economic statistics look cheery but the majority of voters think otherwise is because for the great mass of people who have credit card balances, ballooning mortgage payments, and who pay $50 to fill up the tank simply aren’t getting ahead. However, for the upper crust – think of the Monopoly character with the big moustache and the morning jacket – things have never been better.
3) In my opinion, fiscal policy should rarely (if ever) be used to stimulate the economy. Better to have the Fed use the lever of monetary policy than to have politicians give candy to voters. We have a President who can’t say no to a spending bill, and a Republican Congress which makes drunken sailors look parsimonious. In addition, the Fed has brought interest rates to historically low levels. Of course you have a strong economy. However, while monetary policy is to a large degree self-correcting, taming budget deficits requires fiscal discipline which has been lacking since the days of Robert Rubin.
The president claimed to Larry Kudlow that he intends to wield his veto on this latest spending bill – I’m skeptical. Let’s see it, George!…
mega – At the risk of sounding like you, boy are you an idiot. You can’t even define the word progressive. Under virtually any tax system, even one with flat rate, the rich are clearly going to pay more of the pie. And it’s certainly the case that, under any tax system, one way to make the rich pay more is gear your government’s entire fiscal policy toward making sure that rich people get rich faster than poor people. Yeah, that’s progressive, you blustering moron.
As for “left-wing,” surely you jest. Since when is understanding words and attempting to make rational arguments left-wing? Probably since the beginning of George Bush’s presidency, I guess.
Wut we have heah is a failure ta camuhnicate!
http://gregmankiw.blogspot.com/2006/05/framing-and-progressivity.html
Absent an agreed upon definition of “progressivity” we are left to hurl insults.